Moody's affirms Hong Leong Bank

Moody's Investors Service said it affirmed Hong Leong Bank Bhd's ratings following news that it has entered into a share subscription agreement with Chengdu City Commercial Bank Co. Ltd.

The ratings affirmed include its global local-currency long- and short-term deposit ratings of A2/prime-1; foreign-currency long- and short-term deposit ratings of A3/prime-1; foreign-currency subordinated debt rating of A3 and its bank financial strength rating of C-.

The outlook is stable.

The proposed investment will allow Hong Leong Bank to form a strategic alliance with Chengdu City Commercial Bank to tap the promising and growing financial services sector of China, Moody's said.

However, the bank's financial leverage will rise slightly as the subscription will be met wholly by cash, the agency said. The bank will be challenged by risks apparent in China's operating environment, Moody's said, and it is not clear whether it will have sufficient management control.

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